Mortgage Fraud in the age of AI: what every intermediary should know

Artificial Intelligence (AI) is transforming the mortgage industry, offering efficiencies and insights that were unimaginable a decade ago. But alongside these benefits, AI is also reshaping the landscape of financial crime, particularly mortgage fraud. For intermediaries, understanding these changes is critical to safeguarding both clients and businesses.

The evolving threat

Mortgage fraud is estimated to cost the UK £1.3 billion annually, with 84 in every 10,000 applications suspected to be fraudulent*. It has traditionally relied on falsified documents and misrepresented information.

Today, fraudsters are leveraging AI tools to create convincing fake identities, generate synthetic documents, and even mimic legitimate communication patterns. Deepfake technology and generative AI make fraudulent applications harder to detect using traditional methods.

Understanding AI

AI has been around since the 1950s, but recent advances have made it more accessible and powerful. Today, AI falls into three main categories:

• Narrow AI: performs specific tasks, like chatbots or robotic operations
• Generative AI: creates original content such as text, images and videos, which are based on prompts
• Artificial General Intelligence (AGI): a theoretical concept where AI matches or surpasses human intelligence

While they bring benefits such as automating repetitive tasks, analysing large datasets, and improving decision-making, they also create opportunities for fraudsters.

AI-enabled fraud

Fraudsters are leveraging AI to make scams more convincing and harder to detect. Common tactics include:

• Deepfake fraud: AI-generated images or videos used to impersonate individuals
• Synthetic identities: fake identities created using AI tools
• AI-enhanced phishing: highly personalised scams that mimic legitimate communication
• Fraud automation: large-scale, rapid execution of fraudulent activities

Spotting AI generated documents

AI generated IDs and payslips often look authentic but contain subtle errors. Look out for:

• Misaligned text or inconsistent fonts
• Incorrect validity dates or unrealistic salary figures
• Missing security features or blurred text
• Spelling mistakes or formatting inconsistencies

Verification tools like PRADO (Public Register of Authentic Identity and Travel Documents Online) remain essential for confirming authenticity. Comparing documents against official templates can help identify discrepancies.

What to keep in mind

• Stay informed: fraud tactics evolve quickly. Regular training and updates are essential
• Maintain vigilance: technology can assist, but human judgment is irreplaceable. If something feels off, investigate further
• Use trusted resources: refer to official databases like PRADO and stay connected with industry updates

AI is redefining both the risks and the defences in mortgage fraud. By understanding these technologies and their implications, intermediaries can better protect their clients and uphold the integrity of the market.

For more insights on preventing mortgage fraud, and to watch our recent webinar, visit our Mortgage Fraud support page. 

*Fraud costs the UK economy £193 billion a year, equating to more than £6,000 lost per second every day - Experian UK

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.